Not long ago, Mr. Liu put all the dollars in his hands into a regular, he told the International Business Daily reporter, 1 year regular interest of 5.0%, which is quite cost-effective.
According to the reporter of International Business Daily, the current one-year dollar deposit interest rate of Chinese domestic banks is generally between 3.4% and 5.1%.
So, is it the best choice to deposit US dollars and how long will high interest rates last? Is it necessary for depositors to temporarily exchange funds to lock in high interest rates?
A staff member of the domestic branch of Industrial and Commercial Bank of China told the International Business Daily that starting from June 5th, the bank’s one-year fixed deposit interest of over $50000 will be 4.3%. There are quite a few customers who come to deposit US dollars, “said the staff member. If they hold funds of over 50000 US dollars, it is more tempting to deposit US dollars regularly.
What is the reason for the rise in US dollar deposit interest rates?
The main reason is that the Federal Reserve has raised interest rates. Mei Xinyu, a researcher at the Institute of International Trade and Economic Cooperation of the Ministry of Commerce, said in an interview with the International Business Daily reporter that the domestic inflation situation in the United States is still worried, and it is expected that the Federal Reserve may continue to raise interest rates once or twice. “This will support further higher interest rates on bank dollar deposits.”
However, Mei Xinyu and other industry insiders generally believe that such high interest rates and high exchange rates will not last for a long time. “There is a risk of triggering an economic and financial crisis, aggravating the already heavy debt burden of the US government, and a major obstacle to the ‘re-industrialization’ that the US government has been calling for.” Mei Xinyu said.
Zhou Maohua, macro researcher of the financial markets department of Everbright Bank, believes that from the current inflation and employment performance of the United States, the dollar deposit rate is expected to continue to maintain a relatively high level for some time to come, but the upside space is limited. On the one hand, the US job market is strong, inflation is sticky, the core price is much higher than 2.0%, the Federal Reserve inflation control work is still not completed, there is no basis for policy change; The downward pressure on the US economic outlook is greater, and the Federal Reserve has come to the end of continuing to raise interest rates, but it may continue to maintain high interest rates for some time.
Mei Xinyu believes that from the official point of view of the United States, the first half of next year should be a better time to cut interest rates. Because next year is an election year, stabilizing growth and protecting the economy by cutting interest rates is what Biden’s campaign needs. “When the dollar cuts interest rates, it starts to depreciate against the renminbi.”